Industry Committee on Feb. 10th, 2009

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

I’m not getting many answers.

Minister, Bombardier, the aeronautics giant, recently announced that it was going to lay off workers. They are talking about 710 layoffs in Montreal. We know that Quebec is going to lose aeronautics jobs. So why have you not, as Minister of Industry, promoted the idea of adopting refundable research and development tax credits?

I would also add that giving refundable research and development credits seems to me to be a much more effective approach than deregulating.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

We heard a lot of suggestions before the budget, in discussions with the companies and with people across Canada.

There are other announcements in the budget to help companies like Bombardier. For example, I’m thinking of income tax, access to credit and similar measures that might help that company.

[The Chair, Conservative, Michael Chong]

Thank you, Minister.

Mr. Warkentin.

[Chris Warkentin, Conservative, Peace River, AB]

Thank you, Mr. Chairman.

Thank you, Minister, for coming this afternoon. We appreciate your attendance at our committee meeting.

I would like to start out by discussing--I think I would be remiss, as a member from a largely rural riding, if I didn't--one of the highlights of the budget, and that's the issue of broadband being extended to areas like mine. I'm wondering if you could maybe provide some details.

Clearly we know that broadband is one of the things that set Canada apart from other countries in terms of being prepared for the new economy. Certainly our rural communities are dependent--just like anybody else--on broadband, or they could become dependent on broadband.

I know there were questions asked on this, but I'm wondering if you could give details on any additional plans: how is this going to be executed, and what we can expect in terms of the benefits of this particular initiative?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

First let me answer your question directly and then give a little bit of background.

As I mentioned to Mr. Rota, I'm certainly very anxious to engage with you and other colleagues from rural communities. I represent a rural community, and I can tell you that there are unique challenges to broadband access--as I said, topographical and just the sparseness of some of these communities, just to give you two examples.

Yes, we're anxious to have your input. As you know, Budget 2009 gives about $225 million over three years to Industry Canada to develop a strategy and implement the strategy. Broadband right now is available in 94% of households. That doesn't mean they're all subscribers, but it is available.

Right now we're up to about 64% subscribing, which was up from 58% just a year ago. That's the trend line, but among households, we still have the tough 6%, or however you want to describe them, that don't have that.

It represents...you know, 19% of households in rural areas remain unserved by broadband networks, once you're into the rural areas. That's the tough 19%, as I mentioned. We are going to have to have some expenditures, but I believe, with your input, we can get to a better place on that.

[Chris Warkentin, Conservative, Peace River, AB]

I appreciate that. And we will continue our discussions with regard to that, but now I want to move to a different issue.

I come from the west, from the northwest portion of the province. Although the automotive bailout, or whatever anybody is calling it these days--

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

We call it a loan.

[Chris Warkentin, Conservative, Peace River, AB]

Exactly. And that's why I look for some clarification.

When I meet with folks, although there's some major hesitancy coming in with regard to the government intervening in the way that it has, I think with clarity...and I've seen Canadians, with clarity, responding differently to this initiative.

I'm wondering first if you could describe to the committee, and to those people who may read the transcripts or different things, how best I should be communicating this to my constituents in terms of what the option would be for Canadians to see the entire collapse of maybe two of the Detroit three that are looking for help during this time. But also, exactly what terms can you provide for us in terms of the agreement?

Clearly it's a loan. You and I know that. I'm just not convinced that the average Canadian knows that.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Well, the media continues to use the term “bailout”, which complicates matters, I would say. I'm not sure what a bailout is, but this isn't one of them, that much I know.

I think what you should say, or what I recommend you say, to your constituents is that really the automotive sector domestically is facing an existential moment, that the impact of that going away would be felt not just in Ontario or in three or four cities in Ontario but across the country in lost economic activity, lost jobs. It would echo throughout the whole country.

That's why the United States made the decision it made, and why it was supported by Democrats and Republicans. They saw it as something that affected the whole economy--not just one sector, not just a couple of businesses, but the whole economy.

So that's the rationale. The rationale is that we wanted to help that industry restructure. It's not business as usual in that industry, and it won't be business as usual. They're going to have to restructure and they're going to have to shed capacity, that's very clear. But at the same time, we can help them get through the short term.

This affected every single carmaker, by the way. That's the other thing to say; this is not just a Detroit three issue. Toyota is down 40%. Honda is down 40%. Nissan just cut 20,000 jobs yesterday. They're down everywhere in the world. The fact of the matter is that for various historical reasons, GM and Chrysler are unable to weather the storm to the same extent as Toyota or Nissan or Honda.

So that's the situation. But we have set in place conditions to protect our investment, to ensure that the restructuring is one that is reasonable, and that Canada takes its place within that restructured industry.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Warkentin. Thank you, Mr. Minister.

Mr. Masse, you have the floor.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

I can't imagine where the media got that type of impression. Here's your Minister of Finance saying “I don't believe in corporate welfare...and I don't believe in shoring up failing businesses. I'm not a band-aid solution kind of finance minister.”

I could read more and more of those things, so I don't think it's fair to blame the media for the description that's now being heard over and over. That's really unfair, because if you look at the history, the fact of the matter is that even back in the recovery of Chrysler before, it paid a dividend back to the province of Ontario, and it has led to the most successful manufacturing facility, in terms of the minivan, since the Second World War.

I'd like to get your opinion, though, on something with regard to the auto sector. Where is the actual Canadian Automotive Partnership Council right now? What's the status of it?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

I understand that it hadn't been meeting before I got there. Maybe Richard could tell you.

[Richard Dicerni]

The minister's predecessor had two or three meetings, I seem to recall. In the fall there was the election, and subsequent to the election the minister has been quite involved meeting bilaterally with a number of these car companies as well as with people in the U.S. and so forth. So there have been, I would say, ongoing bilateral exchanges with a number of these companies, and he's met with his provincial colleague, Mr. Bryant, on a number of occasions.

[Brian Masse, NDP, Windsor West, ON]

Does it make sense to reinvigorate this vessel? It had a plan. It was never acted upon. I don't know who you're taking advice from in terms of the auto sector, but it would make sense that right now everybody's scrambling for lifeboats. There would be an attempt by leadership to bring the industry together.

I'd point out a specific example, which is that people think the industry is just disappearing. It's not. It's reforming itself. We will debate the differences about the Canadian strategy versus the American strategy, but something that is actually happening is that General Motors has said no to Canada building the Volt. They are going to build it in Detroit. Just recently they secured the battery procurement that has now led to another four battery factories going to be built in Michigan.

What is your response to that? We can have our differences of opinion about the competitiveness. You would argue that lower corporate tax, corporate tax cuts, and a whole series of things that you've done are successful. The United States has a $25 billion plan and a few other things as well, but the reality is General Motors is investing in Michigan and not in Canada. What do you say to that?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

I would say that's why we have the auto innovation fund, to encourage innovative thinking. We believe that we have some of the biggest brains in the world when it comes to autos, so we should be part of the innovation of the sector. We believe that our parts suppliers are the best in the world when it comes to innovation, so I think the value proposition that we made is very strong, as a matter of fact.

So, no, I don't think we're saying anything different here. I would say that it's not just the role of government. The assembler and management have to take their role and responsibility, as does the union.

[Brian Masse, NDP, Windsor West, ON]

Right, but the reality is that new plants are coming up with new technology, but they're just not happening in Canada.

I'm glad you mentioned the parts sector. Maybe I can get a clarification as to your policy on parts.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

We just had a new plant built in Woodstock, for crying out loud. That was a $1 billion investment by Toyota. So you're wrong, actually.

[Brian Masse, NDP, Windsor West, ON]

Well, it's not happening to the degree that it's happening elsewhere. We're slipping in assembly numbers. That's just the reality. We're not getting better; we're getting worse.

I would like to know your position on the parts sector as well as on the tool and die and mould makers. They're actually making their way to Ottawa, and I hope you have a chance to meet with them. They've asked for support in the past. They're owed billions of dollars right now from the large companies. What's your plan, or is there a plan to deal with this situation? Because they're failing right now. They're going bankrupt, and if we lose that part of the underpinnings, we won't be able to have any type of a market, because they are the backbone and the most fragile part.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

I certainly am willing to listen to their suggestions. They have relationships with the people they supply, which are based on commercial terms. That is part of the issue as well. So I wouldn't say it's primarily our responsibility.

[Brian Masse, NDP, Windsor West, ON]

Okay, but you're willing to provide loans to companies that owe other people billions of dollars, and you don't even have a comment on that? Is that going to be the policy?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

The companies, as you know, have not taken us up on the loan, so--

[Brian Masse, NDP, Windsor West, ON]

That is interesting in itself.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

It may be interesting. I think they've decided to go for a longer-term kind of proposition, but the fact of the matter is that I can't force them to take the money. So for me to demand conditions on money they haven't taken would be kind of an odd position.

[Brian Masse, NDP, Windsor West, ON]

Obviously, if they would take the money—

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

If they take the money, then they have to keep paying their suppliers.